Marketing Segmentation Helps Attract More Business

What is Marketing Segmentation?

Marketing Segmentation is the process of dividing your potential customers into groups with similar needs or interests. It’s a common practice in big business. But your small business can also reap the benefits of segmentation.

Why is segmentation important? 

Segmentation helps you spend marketing dollars wisely, making your campaigns more effective. Make your punches count instead of jumping in the ring and swinging blindly.

People buy from you for different reasons.

That’s even true for companies that only have a single product with no size or color choices. Their customers might all need the same function provided by a little black widget. But one person might buy a black widget from only one company because of convenience, another for quality, and another still because of your speedy delivery.

In the world of Auto Detailing consider the fact that some do business with you because of geographic proximity, some because of price and others because of some kind of special service that you offer.

Marketing Segmentation - The “Same” and the “Different”

The best segmentation results in groups that are distinctly different from each other, each containing a set of people who are as similar as possible. Segmentation can be done on the basis of Geographic, Demographic, Psychographic or other elements like buying behavior. You can also look at it from another perspective and segment based on where people are in the buying cycle. My friend Chris Ruzicka gives some examples from his experience at Sara Lee. You'll see that these categories don't apply to detailing, but you'll get the idea.

Examples of segmentation based on buyer preferences:

• The “Health Conscious” who are looking for something healthy
• Those who wish to satisfy their desire for taste or texture
• The “Brown Baggers” who want something inexpensive to go with their sandwich

Examples of segmentation based on where people are in the buying cycle:
• Warm prospects (not ready now, but likely in the future)
• Ready to buy now
• Recent purchasers
• Long-ago purchasers who might buy again

Tailored appeals get better results

When you target different segments with tailored language you’ll get better results. Consider the example of selling homes in a high end neighborhood.  You can craft a different message for each group. Attract families by talking about the proximity to entertainment venues. Senior citizens will be attracted by the security offered by your gated community.

Focused efforts reduce cost

Segmentation can help you choose focused avenues of communication. A low end used car dealership would be foolish to include high income zip codes in their direct mail campaign. Focusing on the appropriate zip codes for your campaign will reduce advertising costs and increase response rates. You can also use print ads that run in smaller but more targeted publications.

Marketing Segmentation leads to new opportunities

A segmentation exercise can reveal fresh insight. As new information and insights emerge, you’ll begin to discover opportunities for new products, services or ways to deliver them.

Analyze your segments to guide your budget

It is important to analyze each segment regarding growth opportunity, margin, and revenue.  Most of the time, but not always, you want to invest marketing dollars against those segments with high margins and the greatest opportunity for a return. For all other segments your marketing spend should be at a “maintenance” level.
 

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Want help with your marketing efforts? Find out more about Steve Smart and 2Q Solutions or connect with him on Facebook.